Network News

March 13, 2019

Funder Arnold Ventures Highlights the Value of the Network’s Approach and Impact

This article was written by Hannah Sawyer and originally published on the Arnold Ventures website. Arnold Ventures has invested $4 million in the National Resource Network, funding efforts to develop multi-year financial plans for five additional economically challenged cities; launch a competition among states to create more State Resource Networks; and provide second-round support for up to five cities to implement their existing multi-year financial plans.

Rockford, Illinois, was once known as the “screw capital of the world,” an industrial powerhouse in the 1970s and ’80s that produced billions of screws, bolts, and fasteners for manufacturers around the globe.

But over the past 20 years, the city — where good-paying jobs straight out of high school were once plentiful — has struggled with long-term economic decline. The issues cut so deeply that in 2013 “Forbes” gave Rockford a dubious distinction as one of the most miserable places to live in the country.

Mayor Thomas McNamara would be the first to admit Rockford has some big problems. His first day on the job a little over a year ago brought him face-to-face with public safety issues, deteriorating public infrastructure, and a $156 million, eight-year budget deficit.

The City of Danville, Virginia

However, the headlines don’t tell the whole story, he says. Over the years, dedicated members of the community have been reinvesting in Rockford, even when the picture looked bleak. Now with the help of the National Resource Network, a consortium of experts who work hand-in-hand with city governments to tackle serious financial issues, McNamara and others hope to change how people view the city.

“I think the next five years will tell us a lot about who we will be and what we can be,” he said in December.

‘Death by 10,000 cuts’

The National Resource Network was formed by the Obama administration following the 2008 recession to help rebuild areas of the country that were particularly hard hit by the stock market collapse. However, when Executive Director David Eichenthal and his team arrived in some of the most distressed cities in the United States, they found many of their problems had been exacerbated by the recession, not caused by it.

Long-running financial problems were leading to “literally death by 10,000 cuts” in forgotten places dotting the country from coast to coast, Eichenthal said.

When the Network started working with Fall River, Massachusetts, for example, the city had a 100-year record of population decline. Downtown Waco, Texas, was wiped out by a tornado in the 1950s, and the city had struggled to attract businesses ever since. And Rockford had been hit by periods where unemployment soared to more than 20 percent.

“What you’re left with, particularly in an economically challenged city, is a city government that essentially provides police protection and fire service and not much else,” Eichenthal said. And communities that were dealt such “body blows,” as he calls them, were struggling to figure out what to do next.

Eichenthal’s team decided that what these cities needed was a plan. That idea wasn’t necessarily a new one: Private companies already offered consulting services to small governments. But what Eichenthal came to believe, and what would come to separate the Network’s approach, was that it wasn’t the recommendations that mattered as much as the way they were developed.

So it created a process that was collaborative and tailored: In each city, team members conduct extensive interviews and go line-by-line through the budget to understand how money is spent. They then perform in-depth benchmarking and financial analysis to project what might happen over the next five to 10 years. They bundle their work into a financial roadmap to show cities how they got to where they are, where they could make cuts to stabilize finances, and what could happen if they don’t make any changes.

The historical context is important in places such as Rockford, where problems are often cyclical: Governments squeezed by population loss will hike taxes, which deters new businesses and homeowners. As costs continue to rise, officials divert money from investments in community and economic development, infrastructure, code enforcement, and other things that promote growth to core functions.

City of Danville

Former site of Dan River Mills, a textile mill
that closed in the early 2000s.

Such was the case in Danville, Virginia, which still hadn’t recovered from the closure of textile company Dan River Mills in the early 2000s by the time City Manager Ken Larking met Eichenthal’s team in 2015.

At its peak, the mill employed 14,000 people in the city of a little more than 40,000.

“When it finally closed and the last few thousand jobs went away, that’s when it really hit everyone,” Larking said. Since then, “all the metrics that someone would normally look at, we’ve struggled to keep up.”

People would drive through neighborhoods, see dilapidated homes vacated by the former employees of the mill, and decide against buying. Home values fell. Investors snapped up cheap properties and let them fall into disrepair. Property tax revenue was flat while the cost of public services increased, leaving Danville in a financial bind.

But even as the city struggled, the community began to rally together. The local government turned to nonprofits and homeowners to clean up the blight, starting with the downtown area and historic district.

They then sought further help from the Network, which sifted through city records and financial and economic data. In April 2018, the team presented a 165-page document with recommendations ranging from a citywide wage freeze to building a new parking lot in the downtown district to spur development of new office space.

Eichenthal admits that some of the recommendations the Network made to Danville were politically controversial. And he knows not everyone will agree with them, despite the fact that the proposals were based on extensive research and case studies of similar communities.

However, Eichenthal said, the Network never intends for its plans to be adopted in their entirety: They’re supposed to be a starting point for tough conversation and a blueprint for moving forward.

What the Network gave Danville officials was a strategy for continuing their investments in the city and building on the work that’s already been done.

Envisioning a different future

McNamara had a reason to be optimistic as 2018 drew to a close: The Rockford mayor was celebrating the recent passage of the next budget. For the first time in 20 years, Rockford would enter the next year with a surplus, which McNamara and the council planned to apply to projected future deficits. And the city had already begun working on its 2020 budget.

Before now, “we never focused on anything but the year right ahead of us,” McNamara said.

During the roughly five years the Network has been around, it has worked with more than 50 cities; Arnold Ventures has funded their efforts in nine of those cities, including Danville and Rockford. Eichenthal and his staff have become staunch believers in the idea that recovery is possible for cities that were written off long ago.

“I do this because I think these places matter, and I think the people in these places matter,” he says.

Rockford is no longer the world’s screw capitol, but it has reestablished itself as a national aviation repair hub. It has seen a double-digit drop in violent crime — all while cutting the eight-year projected budget deficit to under $80 million, thanks to help from the Network. McNamara, the son of a former Rockford mayor, hopes this is the beginning of a long comeback for the city.

Danville Reimagined

In Danville, Larking said people used to read about crime on the front page of the local news, but now they’re reading about a new business and development in downtown. There’s a lot more work to be done, but he says he hopes the picture of Danville is a hopeful one. He wants to see people start moving back to the city.

Across from the desk where he sits each day hangs a photo of a neon sign that reads “Home,” a visible reminder of the sentiment fueling Danville’s nascent turnaround.

The sign used to be atop Dan River Mills, but several years ago the city, working with the Danville Historical Association and Danville Regional Foundation, restored it and moved it downtown.

“It’s become a symbol for a lot of people in this community to say this is our home,” Larking said, “and we care about it, and we’re proud of it.”